Good prospects for Europe urea despite overseas output boom

27 July 2012 16:49[Source: ICIS news]

LONDON (ICIS)--Stable European urea producers have good prospects for the next five years even though approximately 60 new urea plants are scheduled for construction during the period, with one-third located in China, the vice-president of the Fertilizers Europe trade association said on Friday.

“Even if all the investment plans to increase the supply of urea by 2016 are fulfilled, the surplus of potential supply to steadily growing demand will not exceed 10m tonnes,” added Pawel Jarczewski, who is also CEO of the second largest European urea supplier, Poland’s Zaklady Azotowe Pulawy (ZAP).

Realistically, there would always be some instability in the supply of urea caused by factors such as temporary gas supply restrictions and plant shutdowns related to political turmoil, Jarczewski said.

“Added to this are the growing costs of logistics and handling and the constraints on available space at terminals and in vessels. It all makes for a good outlook for the established supply role of European urea producers,” he added.

The greatest increase in urea production is in south and east Asia and ?xml:namespace>Africa, Fertilizers Europe said.

New African fertilizer output was reaching Europe, but buyers faced having to deal with much speculation as to exactly what could be delivered and precisely when, it added.

Urea demand should increase at a rate of 2.4% per year to 2016, according to a forecast from the International Fertilizer Manufacturers Association (IFA).

Growing industrial use of urea, such as in reducing nitrogen oxides to nitrogen and water within catalytic converters, means that by 2016 the global consumption of urea for industrial purposes will be 21.5m tonnes, stemming from an annual increase rate of 4% over five years, Fertilizers Europe noted.